Maternity Pay & Family Benefit Vs. High Earners & Breadwinners

Have you checked your work’s maternity policy? It will say there if your employer offers SMP or OMP (Occupational Maternity Pay). You mentioned you were in a ‘new job’. Were you there prior to pregnancy? I mention this as to be eligible for SMP from your work you must have worked for your employer for at least 26 weeks continuing into the ‘qualifying week’ which is 15 weeks before the expected week of childbirth.

6 weeks OMP (paid by the employer if I understand omp correctly), followed by SMP paid by the government.

Yes, I can confirm I will qualify, I started there September, so will have been there just under a year by the time maternity leave comes around.

Just as the lady above said it depends on your employer and would of had to have been there at least 26 weeks. I’m also the higher earner in my household and was lucky enough to get 4months full pay from my employer and then down to SMP, which was also a huge drop for me. I’d advise trying to save from now, so you can try and atleast top up your SMP to cover bills. You could also have a look at universal credit to see if you’d be entitled seeing as your husband has a low income.

Original post updated, it’s just SMP I get not OMP. The first 6 weeks is SMP at 90% rate.

Sorry forgot to add. In regards to child benefit you can still apply once baby is born. If you do get it, you’ll potentially have to pay some back depending on how much you’ve earned within the given tax year.

thanks, that year I’m off I won’t get anywhere near my normal tax rate /high earnings so shouldn’t be any pay back but will need to figure out how to cancel it once I return to work.

I’d advise saving up during your maternity maybe 6 months of living expenses and working right up to birth 37 weeks . So you’re in a stronger position financially.

I get it, it’s hard for everyone on current mat pay but I’m similar to you in that I earn a decent amount so the drop makes it difficult to cover bills…
You’ll need to figure out how much you will earn to see what you will be taxed. Unfortunately, Mat pay is just income so if you’ve earned £37,700 by the time you go on Mat leave, then it would be taxed at 40% 😒

Child benefit or whatever it’s called these days is taxable when one of you earns over 50k, and pointless if one of you earns over 60k. You still register just to get pension credits but don’t claim the money.

Tax free childcare should be available for 9 month olds before long, 15 hours (though works out more like 11 full time), only eligible if your taxable net income is less than 100k.

You can look at ways of reducing your taxable income before May leave, such as pension payments, but you may prefer to build up your savings instead.

There’s also shared parental leave, your partner can take time off at the £700ish a month and you return to work. I believe you can decide at any point, so when you feel ready to go back (financials dependent)

It’s shocking isn’t it!

I think the other comments cover it but here is the summary:

SMP is 90% of your earnings for six weeks then approx £700 a month. This is taxed at a normal tax rate so if your income puts you at a high tax rate for the year then expect to pay the full tax on that amount (ie even the £700 could be taxed at 40%). But if you take long enough off at that pay, your tax rate might lower.

You can share leave with your husband so you go back to work and he takes time off at £700ish a month, taxed at his rate.

Most companies offer enhanced maternity pay so check if your company offers that.

Starting Sept 2024 children of all ages are eligible for 10 hours free childcare, and that will go up to 30 hours in 2025. If either parent earns above £100K in a year you will not be eligible for this benefit, so it’s worth thinking in advance about whether it makes sense to lower your income temporarily through increased pension contributions or charity donations

Because your mat leave starts in August and you’re unlikely to have earned that much in the first four months of the tax year, in your mat leave tax year your total income will be lower. SMP is £749 by the way. You will be entitled to child benefit and you should be the one receiving it as your partner continues to work. This will cover your contribution to the state pension. It’s about £90 a month for the first child.

If once you’re on mat leave your income drops significantly then as a couple you may be entitled to benefits (unless you have savings over £16,000).

Still saving now for August and working right up to the due date is really good advice.

Also checking your budgets now and making sure you’re getting the best rates on any savings etc.

You’ve got this!

it starts April 2024 and will be 15 hours 😊

It's 15 hours over 39 weeks, which is equivalent to 11 hours a week throughout the year and in April 2024 its only for children who are 2+.

yes, thanks that’s true. Mine is a term-time only nursery but I agree it makes sense to calculate it like that for most people.